Rite Aid Corp. shareholders on Thursday approved a proposal that limits the “golden parachute” clause in the contract of chairman and CEO John Standley and other executives, according to the group that proposed the measure.
Michael Pryce-Jones, director of corporate governance for CtW Investment Group, said about 58 percent of Rite Aid shareholders approved the non-binding measure, even though the board of the East Pennsboro Township-based company had recommended a shareholder vote against it.
If the board decides to enact the proposal based on Thursday’s vote, it would limit the accelerated vesting on performance-based shares to a rate determined by the board’s compensation committee.
The policy is especially important concerning recent rumors of a possible Rite Aid sale, Pryce-Jones said. If that were to happen, under the former policy, Standley would have been in line to receive a $42.2 million package, according to a news release from CtW and Rite Aid proxy reports.
Rite Aid officials did not return messages for comment Thursday.
In its proxy statement filed in May, the company said it “strongly opposes” the measure because the company believed its structure of equity awards already was “balanced.” The proxy report also claimed the current format aligned the interests of senior officers and stockholders and, if enacted, would put the company “at a disadvantage in retaining talented leadership.”
The policy, as proposed, calls for no accelerated vesting of long-term performance awards granted to any senior executive at the company if there is a change in control — like an acquisition. Rather, the board would determine at what rate the award would vest.
The board’s compensation committee, however, may provide an “applicable grant or purchase agreement” that any unvested award would vest on a partial, pro rata basis up to the time of the executive’s termination. The committee would determine qualifications for the award.
After the meeting, Pryce-Jones said that with the potential acquisition talk surrounding Rite Aid, CtW wanted any sale to be for the “right reasons,” and not because the executive team would receive a large bonus if it would happen.
“We’re not objecting to him getting paid,” Pryce-Jones said. “But if there is going to be a sale, we just want it done at the right price, not because (executives) have an incentive to sell because of their compensation package.”
CtW Investment Group represents the interests of union pension funds associated with the Change to Winabor federation. According to Rite Aid’s proxy report, the group owns 865 shares of Rite Aid common stock.
The policy would need to be enacted by Rite Aid’s board before it takes effect.
Rite Aid trades on the New York Stock Exchange at RAD.